Apple’s Odds of Being Cheap Stock Put at 90%: Chart of the Day

Jan. 29 (Bloomberg) -- Apple Inc. has a 90 percent chance
of being undervalued after a four-month drop in shares of the
iPhone and iPad maker, according to Aswath Damodaran, a finance
professor at New York University.

The CHART OF THE DAY tracks Apple’s stock performance since
the start of 2012. Last week’s close of $439.88 was the lowest
in a year and 37 percent below its record set on Sept. 19. Apple
rose $9.95 yesterday to $449.83.

Damodaran, who has written books about stock valuation,
arrived at his figure by using a $440 share price and estimating
the Cupertino, California-based company’s revenue growth, profit
margin and cost of capital. He presented the results two days
ago in a posting on his blog, Musings on Markets.

Apple’s shares are a buy for “value optimists” who are
willing to go against the prevailing opinion and are confident
in their analysis, he wrote. Damodaran added that he bought an
unspecified number of shares at $500 each earlier this month.

The purchase followed his sale of a undisclosed stake in
Apple near the end of last year’s first quarter, when the stock
surpassed $600 for the first time. Both trades are mentioned in
the chart.

Damodaran valued Apple at $609 a share a month ago. The
company’s fiscal first-quarter earnings report did little to
change that estimate, the posting said. The results, released
last week, showed the slowest sales growth since 2009 and the
first decline in earnings per share since 2003.